Federal and state regulators have ordered the Florida Bank of Commerce in Clearwater to stop "unsafe and unsound" banking practices, citing the bank for inadequate supervision and engaging in "hazardous lending." Without admitting or denying the charges, the bank accepted the cease-and-desist order, according to documents filed in August with the Federal Deposit Insurance Corp. (FDIC) in Washington and with the state of Florida.
A Florida Bank of Commerce official said Thursday that the bank is complying with regulations and has corrected the problems cited by regulators. Chairman C. Richard Ross said "We've made good progress." He said the problems date back to an examination in January by regulators.
"We had some bad residential real estate loans," Ross said. "We've cleared up a lot of the problems."
He described his institution as having the same kind of troubles as a "typical Florida bank."
A cease-and-desist order is considered a serious step in the regulatory process, said David Barr, a spokesman for the FDIC in Washington.
Nationwide there were 98 cease-and-desist orders issued from August 1989 through August 1990, according to Kenneth Thomas, an independent bank analyst in Miami.
Only four involved Florida banks.
Florida Bank of Commerce is a state-chartered institution and falls under state regulatory guidelines as well as federal guidelines.
The state comptroller's office would not acknowledge that the cease-and-desist order had been issued, but the document was signed by Comptroller Gerald Lewis on Aug. 1.
Specifically, the bank, which has four offices in Pinellas County, has been accused of having:
Operated in way that could jeopardize the safety of deposits. (Each account still is insured by the FDIC up to $100,000);
Incurred excessive loan losses;
Failed to provide adequate loan guidelines;
Made loans without proper security or enough money down from borrowers.
The bank, with assets of $49.7-million as of June 30, is the 11th-largest bank of 18 in Pinellas County.
According to Sheshunoff Information Services Inc. of Austin, Texas, the bank has the highest percentage of non-performing loans to assets of any bank in the county as of June 30, the latest date for which figures are available.
Florida Bank of Commerce has 4.1 percent of non-performing loans to assets. The average in Pinellas was 1.52.
The bank has the next-to-lowest percentage of primary capital to assets. Banks with higher percentages of primary capital are considered stronger.
Florida Bank of Commerce has 5.56 percent capital-to-assets ratio. The average for Pinellas is 7.22.
"We need more capital, but name a bank that doesn't," Ross said.
The bank has made a name for itself in marketing by showing Laurel and Hardy films in its lobbies and serving popcorn to customers, as well as sending buses around to mobile home parks to pick up customers.
Ross said the Laurel and Hardy movies and other marketing efforts will continue.